Property, Plant and Equipment Accounting Policy

Property and equipment is stated at cost less accumulated depreciation, and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of Microsoft’s property and equipment are generally as follows: computer software developed or acquired for internal use, three to seven years; computer equipment, two to three years; buildings and improvements, five to 15 years; leasehold improvements, three to 20 years; and furniture and equipment, one to 10 years. Land is not depreciated.

Amount before accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures.

Microsoft Corp.’s property and equipment, at cost increased from 2017 to 2018 and from 2018 to 2019.

Property and equipment, net

Amount after accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business to produce goods and services and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures.

Microsoft Corp.’s property and equipment, net increased from 2017 to 2018 and from 2018 to 2019.

As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company’s fixed asset base is old or new. Newer assets are likely to be more efficient.

Microsoft Corp.’s average age of depreciable property, plant and equipment improved from 2017 to 2018 and from 2018 to 2019.

Estimated total useful life

Over longer time periods, this ratio is a useful measure of company’s depreciation policy and can be used for comparisons with competitors.

Microsoft Corp.’s estimated total useful life of depreciable property, plant and equipment declined from 2017 to 2018 and from 2018 to 2019.

Estimated time elapsed since purchase

The approximate age in years of a company’s fixed assets. Useful for comparison purposes.

Microsoft Corp.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2017 to 2018 and from 2018 to 2019.

Estimated remaining life

Microsoft Corp.’s estimated remaining life of depreciable property, plant and equipment declined from 2017 to 2018 and from 2018 to 2019.

As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company’s fixed asset base is old or new. Newer assets are likely to be more efficient.

Microsoft Corp.’s average age of depreciable property, plant and equipment improved from 2017 to 2018 and from 2018 to 2019.